U.S. patent number 8,452,654 [Application Number 11/154,779] was granted by the patent office on 2013-05-28 for system and method for issuing rewards to card holders.
This patent grant is currently assigned to RBS NB. The grantee listed for this patent is David W. Power, D. Stephen Wooters. Invention is credited to David W. Power, D. Stephen Wooters.
United States Patent |
8,452,654 |
Wooters , et al. |
May 28, 2013 |
System and method for issuing rewards to card holders
Abstract
A system and method for issuing variable level rewards to card
holders according to expenditures in transaction categories. Card
transactions for a specified period of time are classified by codes
and are assigned to one of several transaction categories such as
entertainment, travel, dining, sporting goods, and electronics. A
total amount of expenditures for each transaction category is
determined. The transaction category with the largest value of
expenditures is determined. The highest available reward is applied
to the total amount of expenditures in the transaction category
that has the largest value of expenditures. Consumers may take
advantage of a high level or more valuable reward in a multi-level
reward structure regardless of their spending habits or patterns
because the more valuable reward is applied to the expenditures in
the largest expenditure transaction category.
Inventors: |
Wooters; D. Stephen
(Woodbridge, CT), Power; David W. (Milford, CT) |
Applicant: |
Name |
City |
State |
Country |
Type |
Wooters; D. Stephen
Power; David W. |
Woodbridge
Milford |
CT
CT |
US
US |
|
|
Assignee: |
RBS NB (Bridgeport,
CT)
|
Family
ID: |
48445410 |
Appl.
No.: |
11/154,779 |
Filed: |
June 16, 2005 |
Current U.S.
Class: |
705/14.34 |
Current CPC
Class: |
G06Q
30/0234 (20130101) |
Current International
Class: |
G06Q
30/00 (20060101) |
Field of
Search: |
;705/14,26,17,21,39,35,10,44,38 ;235/375,380,381,492 |
References Cited
[Referenced By]
U.S. Patent Documents
Primary Examiner: Wu; Rutao
Assistant Examiner: Mittal; Krishan
Attorney, Agent or Firm: DLA Piper LLP (US)
Claims
What is claimed is:
1. A variable level reward system comprising: a transaction data
computer for: (a) receiving from a plurality of sources financial
card transaction data for a plurality of card holders; (b)
organizing said financial card transaction data according to card
holder accounts for said plurality of card holders; and (c) storing
said financial card transaction data organized according to said
card holder accounts for said plurality of card holders; and a
reward computer for determining a reward for one of said plurality
of card holders by: (d) receiving from said transaction data
computer financial card transaction data for said card holder, said
financial card transaction data related to transactions occurring
during a transactional time period; (e) assigning each of said
transactions to at least one of a plurality of transaction
categories; (f) determining an expenditure level for said
transactions in each of said plurality of transaction categories;
(g) determining a transaction category having a highest expenditure
level; (h) applying a high-level reward rate to expenditures in
said transaction category having a highest expenditure level to
determine a first reward amount; (i) applying a low-level reward
rate to expenditures in at least one transaction category other
than said transaction category having said highest expenditure
level to determine a second reward amount; and (j) determining a
total reward amount based on said first reward amount and said
second reward amount.
2. The system of claim 1 wherein said low-level reward rate is
applied to expenditures in all financial transaction categories
other than said financial transaction category with said highest
expenditure level.
3. The system of claim 1 wherein said low-level reward rate is
applied to expenditures in said financial transaction category with
said second highest expenditure level.
4. The system of claim 1 wherein said transactional time period is
a plurality of billing cycles.
5. The system of claim 1 wherein said transactional time period is
selected from the group consisting of a week, a month, a fiscal
year, and a calendar year.
6. The system of claim 1 wherein said total reward amount is issued
to said card holder in the form of a reward selected from the group
consisting of a gift certificate, a rebate, cash, merchandise, or a
coupon.
7. The system of claim 1 wherein said plurality of financial
transaction categories are selected from the group consisting of
travel, dining, groceries, electronics, entertainment, clothing,
sporting goods, home maintenance, lawn and garden, appliances,
pets, and automotive.
8. The system of claim 1 wherein said transactions are assigned to
one of said plurality of financial transaction categories according
to a transaction code.
9. The system of claim 1 wherein said sources are selected from the
group consisting of traditional retailers, online retailers,
entertainment establishments, and travel companies.
10. A computerized method for determining a reward for a card
holder, comprising the computer implemented steps of: (a) setting a
first reward rate and a second reward rate wherein said first
reward rate is higher than said second reward rate; (b) defining a
plurality of financial transaction categories; (c) entering in a
computer said first and second reward rate and said plurality of
financial transaction categories; (d) receiving at said computer a
plurality of financial card transactions for said card holder
wherein each transaction comprises a transaction expenditure; (e)
executing at said computer instructions to: (1) assign each of said
financial card transactions to at least one of said plurality of
financial transaction categories; (2) determining a financial
category having a largest total amount of transaction expenditures
by calculating a total amount of transaction expenditures for said
financial card transactions in each of said plurality of financial
transaction categories and comparing said totals in each of said
plurality of financial transaction categories; (3) apply said first
reward rate to expenditures in said financial transaction category
having said largest total amount of transaction expenditures; and
(4) apply said second reward rate to expenditures in at least one
financial transaction category other than said financial
transaction category having said largest total amount of
transaction expenditures.
11. The computerized method of claim 10 further comprising applying
said first reward rate to expenditures in a financial transaction
category with a second largest total amount of transaction
expenditures.
12. The computerized method of claim 11 further comprising applying
said first reward rate to expenditures in a financial transaction
category with a third largest total amount of transaction
expenditures.
13. The computerized method of claim 10 further comprising applying
said second reward rate to all expenditures.
14. The computerized method of claim 10 wherein said financial card
transactions are assigned to one of said plurality of financial
transaction categories according to at least one transaction code
in transaction data for said financial card transactions.
Description
FIELD OF THE INVENTION
The present invention relates to the field of consumer spending
incentive programs based on card purchases. Specifically, the
present invention relates to issuing variable level rewards to card
holders according expenditures within a transaction category. In
particular, transactions for a relevant transaction period are
assigned to transaction categories and a higher level reward is
applied to the expenditures in the transaction category for which
the expenditures are largest.
BACKGROUND OF THE INVENTION
Consumers who use financial cards for purchases benefit from a
variety of incentive programs that are offered by the financial
institutions that issue the cards. Incentives include rebates, cash
rewards, coupons, gift certificates, merchandise, or any type of
instrument that a consumer may use to make additional purchases.
Because consumers are familiar with many types of incentive
programs and have many options when selecting a financial card,
financial institutions often compete for new customers based on
their incentive programs. Attractive incentive programs with
substantial benefits entice new consumers and may increase the
likelihood that a consumer will continue using a particular
financial card rather than switch to a competing product.
A common incentive program is to issue a reward or rebate based on
total spending for all of the consumer's card purchases. For
example, a consumer may receive a 2% cash-back reward based on the
total amount of purchases made in a year. The disadvantage of such
total-spending based programs is that same rebate or reward applies
regardless of how or where the consumer spends money. Consumers are
not rewarded for making any particular type of purchase.
Furthermore, there is no additional or higher level award that is
available to consumers.
Some companies have attempted to provide consumers with incentives
to make certain types of purchases by rewarding purchases of a
particular vendor's product. For example, a consumer holding a
branded gas credit card may receive a reward or rebate in relation
to his or her gasoline purchases of the applicable brand. The
disadvantage of such a program is that the reward or rebate applies
to only one type and brand of product. There is no reward (or only
a lower level or reduced reward) for other types of purchases.
Furthermore, if more than one reward level is offered, the higher
level reward is available only on applicable brand purchases that
may represent a small fraction of the consumer's total purchases.
The consumer's ability to take advantage of the higher level reward
is very limited.
Still other programs require consumers to spend a certain amount of
money before any rebate or reward is issued. In some instances, a
rebate or reward is issued to all consumers that reach a threshold
spending limit within a one year period. Some programs may issue
rewards or rebates or according to a "tier" structure so that
consumers are rewarded differently in relation to their spending
levels and types of purchases. Each tier may require a consumer to
spend a certain amount of money on certain types of purchases
within a certain period of time. Once a consumer's use of the
account meets all of the specified conditions, including the
spending limit, a reward or rebate is issued. Higher level rewards
apply to the higher spending limits. For example, a higher
percentage cash-back reward may be applied to purchases above a
certain threshold while a lower percentage cash-back reward is
applied to purchases below the threshold.
In tiered structures, consumers that spend the most receive the
most valuable rewards. For customers that do not reach the spending
limit for the higher percentage cash-back reward, the value of the
consumer's reward is reduced significantly because a lower
percentage is applied to the lower spending amount to determine the
value of the reward or rebate. The disadvantage of these types of
programs is that a consumer's purchases must meet a number of
conditions before a significant reward or rebate is issued.
Consumers who purchases do not reach the specified spending levels
are not permitted to participate in the incentive program in the
same way that consumers who reach the specified spending levels are
permitted to participate.
Current incentive programs are limited in a variety of ways and
therefore, do not address the varied spending habits and patterns
that consumers have. The requirements for receiving rebates or
rewards are complex and often require consumers to meet spending
limit and spending category conditions in order to receive a more
valuable or higher level reward or rebate. Consumers that do not
meet all of the conditions, especially the spending level limits,
are effectively excluded from participation in the more valuable
portion of the incentive program. Therefore, there is a need for an
incentive program that allows all consumers to have access to more
valuable rewards or rebates without reaching a specified spending
level or spending with a specific category. There is also a need
for an incentive program that maximizes the reward or rebate to the
consumer by maximizing the purchase amount to which the higher
level or more valuable reward is applied.
SUMMARY OF THE INVENTION
The present invention is a system and method for issuing variable
level rewards to card holders according to expenditures in
transaction categories. Card transactions for a specified period of
time are classified by codes and are assigned to one of several
transaction categories (e.g., entertainment, travel, dining,
sporting goods, or electronics). A total amount of expenditures for
each transaction category is determined. The total expenditures for
each transaction category are compared to determine the transaction
category with the largest value of expenditures. The highest
available reward is then applied to the total amount of
expenditures in the transaction category that is determined to have
the largest value of expenditures. For example, if the largest
value of expenditures in a given month is for travel, then a 3%
cash back reward is applied to the value of the expenditures in the
travel transaction category and a 1% reward is applied to the value
of the expenditures in the remaining transaction categories. The
category to which the highest level award is applied varies each
month depending on the level of expenditures in each transaction
category.
The present invention allows consumers to take advantage of a high
level or more valuable reward in a multi-level reward structure
regardless of their spending habits or patterns. The present
invention examines expenditures in various transaction categories
and maximizes the reward to the consumer by applying the more
valuable reward to the expenditures in the largest expenditure
transaction category.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is a system architecture diagram for an example embodiment
of the present invention; and
FIG. 2 is a flowchart of the primary steps for an example
embodiment of the present invention.
DETAILED DESCRIPTION OF PREFERRED EMBODIMENTS
Referring to FIG. 1, a system architecture diagram for an example
embodiment of the present invention is shown. As shown in FIG. 1,
the present invention may be implemented on a computerized system
executing appropriate application programs related to receiving
card transaction data and analyzing card transactions to determine
a reward for a card holder according to the present invention.
Those of skill in the art will recognize that a system and method
according to the present invention may be implemented using various
combinations of computers and application programs for transfer and
processing of card transaction data to determine a reward and that
the architecture of FIG. 1 represents one such architecture for
implementing the present invention.
As shown in FIG. 1, card transaction data may be received from a
variety of sources 102, 104, 106 such as traditional retailers,
online retailers, entertainment establishments, travel companies,
etc. As card holders use their cards for purchases or transactions
at the sources 102, 104, 106, transaction data for each purchase or
transaction is recorded at the source. Transaction data from the
various sources 102, 104, and 106 may then be transferred to a
transaction data computer 108 operated by a financial institution
or card issuer offering the card holder reward program of the
present invention. Transaction data for a plurality of card holders
may be received at the transaction data computer 108 where it is
organized and stored in card holder accounts. Each card holder
account may comprise identifying information such as name, address,
telephone number, a social security number, an account number, a
card transaction history, and a card reward history for rewards
issued to the card holder in accordance with the present invention.
For security reasons, various portions of card holder account
information may be encrypted and/or stored separately in different
computer systems. The reward program of the present invention may
be applied to a variety of transaction or financial cards such as
credit cards, charge cards, debit cards, smart cards, digital
cards, bank or banking cards, commerce cards, or any type of
electronic transaction or purchase card for which transaction data
may be processed and stored.
The reward computer 100 is used to determine rewards for card
holders according to the method of the present invention. The card
issuer offering a card holder reward program according to the
present invention may specify several parameters to be used by an
application program operating at the reward computer to determine
rewards for card holders. First, the card issuer selects a time
interval or period for determining and issuing rewards. The reward
determination for a card holder account may be made at any point in
time but is typically completed at the end of a billing period, at
the end of a plurality of billing periods, at the end of the
calendar year, or at the end of the year according to the
anniversary date of the card. Once the time period is selected,
transactions that fall within the dates of the time period or
transactional period may be analyzed to determine a reward.
Other information relevant to the determination of a reward
includes transaction categories. The card issuer may decide to
organize transactions into two or more categories. Categories may
relate to types of purchases such as travel, food (e.g., including
dining and groceries), electronics, entertainment, clothing,
sporting goods, home maintenance, lawn and garden, appliances,
pets, automotive, etc. Transaction data that is received at the
transaction data computer 108 and reward computer 100 may have
associated codes that may be used for the purpose of assigning
transactions to categories. Alternatively, the application program
at the reward computer 100 may assign transaction categories using
transaction data such as the vendor providing the product or
service to the card holder. As may be appreciated those of skill in
the art, there are many categories to which transactions may be
assigned and there are many ways to assign transactions to
categories.
Finally, the card issuer determines appropriate reward levels for
the various transaction categories. In an example embodiment of the
present invention, two reward levels are applied to a card holder's
expenditures. A higher reward level applies to the expenditures in
the transaction category for which the card holder's expenditures
were greatest. A lower reward level applies to all expenditures in
all other categories. For example, a 3% cash-back reward may be
applied to the total amount of expenditures in the transaction
category for which the card holder's expenditures were greatest and
a 1% cash-back reward may be applied to all other expenditures. In
alternative embodiments of the present invention, additional reward
levels may be applied to expenditures in various transaction
categories. First, the total value of expenditures in each
transaction category is determined. Then, the highest level reward
is applied to the transaction category with the highest level
expenditures, the second highest level reward is applied to the
transaction category with the second highest level expenditures,
the third highest level reward is applied to the transaction
category with the third highest level expenditures, etc. The lowest
level reward may be applied to total of the remaining
expenditures.
Referring to FIG. 2, the primary steps for determining a reward
according the present invention is shown. In the first step 200, a
card issuer implementing a reward program according to the present
invention determines the frequency with which rewards will be
offered by choosing a relevant transaction period (e.g., a billing
period, a plurality of billing periods, monthly, yearly, etc.),
transaction categories to which transactions will be assigned
(e.g., travel, dining, entertainment, sporting goods, electronics,
etc.), and reward levels (e.g., 3% for highest level of
expenditures in a transaction category, 1% for all others).
Next, in step 202, card holder transaction data is received at the
reward computer so that rewards for card holders may be determined.
Each transaction is assigned to a transaction category in step 204.
If the transaction data that is received at the reward computer
includes transaction codes, the associated transaction codes may be
used to assign transactions to categories. Alternatively, vendor
data or other data associated with the transactions, alone or in
combination, may be used to assign transactions to categories. In
step 206, the total amount of expenditures in each transaction
category is determined. In step 208, the transaction category with
largest amount of expenditures 208 is determined. In step 210, the
higher or high-level reward is applied to the total of the
expenditures in the transaction category with largest amount of
expenditures 210 and in step 212, the lower or low-level reward is
applied to the total of the expenditures in all other transaction
categories. The card holder's total reward is determined in step
214 by adding the amounts determined in steps 210 and 212. Finally,
arrangements are made for the card holder to receive the cash-back
reward 216.
The following table further illustrates the calculation of a reward
according to the method of the present invention.
TABLE-US-00001 TABLE 1 Transaction Date Vendor Transaction Code
Amount May 01, 2005 ABC 111 $3,251.46 May 02, 2005 GHI 111 $302.11
May 04, 2005 ABC 111 $980.80 May 08, 2005 XYZ 401 $1,205.66 May 09,
2005 OPQ 289 $94.77 May 12, 2005 STU 111 $448.29 May 14, 2005 DEF
903 $55.34 May 18, 2005 OPQ 435 $77.60 May 23, 2005 MNO 903 $144.89
May 31, 2005 JKL 903 $87.56
In this example, Table 1 contains transaction data for a card
holder for the month of May 2005. Transaction categories are
determined according to the transaction codes as shown in column 3
of the table. Transaction code 111 may indicate purchases of
electronics from various vendors for the installation of a home
theater. The May 1, 2005 purchase from ABC for $3251.46 may be for
a television. The May 2, 2005 purchase from GHI for $302.11 may be
for a DVD player. The May 4, 2005 purchase from ABC for $980.80 may
be for speakers for the home theater. Finally, the May 12, 2005
purchase from STU for $448.29 may be for a subwoofer for the home
theater. Transaction code 903 may indicate purchases of groceries.
Transaction codes 401, 289, and 435 may indicate other types of
purchases such as airline tickets, dining, and gasoline
respectively.
The following table shows the total expenditures for each
category.
TABLE-US-00002 TABLE 2 Transaction Total Amount of Code
Expenditures 111 $4,982.66 401 $1,205.66 903 $287.79 289 $94.77 435
$77.60
If rewards are issued monthly and two reward levels are applied to
the expenditures (3% for highest level expenditures and 1% for all
others), a reward according to the transaction data in Table 1 may
be determined as follows. The electronics category (transaction
111) is the transaction category with largest amount of
expenditures so the 3% reward is applied to the electronics
category total of $4,982.66 for a reward of $149.48. The total of
the expenditures in the remaining categories is $1,665.82 so the 1%
reward is applied to the $1,665.82 for a reward of $16.66.
Therefore, the total cash-back reward to the card holder is
$166.14.
If additional reward levels are used (e.g., 3% for highest level
expenditures, 2% for second highest level expenditures, and 1% for
all others), a reward according to the transaction data in Table 1
may be determined as follows. The electronics category (transaction
111) is the transaction category with largest amount of
expenditures so the 3% reward is applied to the electronics
category total of $4,982.66 for a reward of $149.48. The total of
the expenditures in the travel category (transaction code 401) is
the transaction with the second largest amount of expenditures so
the 2% reward is applied to the travel category total of $1,205.66
for a reward of $24.11. The total in the remaining categories is
$1,665.82 so the 1% reward is applied to the $1,665.82 for a reward
of $4.60. Therefore, the total cash-back reward to the card holder
is $178.19.
As is apparent from the above example, the amount of a card
holder's reward varies with the totals of expenditures in various
transaction categories. Although example embodiments of the present
invention have been explained in relation to cash-back rewards that
are offered to card holders, any type of reward that is based on a
percentage of a card holder's highest level of expenditures in
various transaction categories may be issued. For example, a gift
certificate, rebates, or coupon may be issued instead of a
cash-back reward.
In the present invention, transaction categories are used to
determine a card holder's largest expenditures so that a higher
reward level may be applied to those expenditures. It is not
necessary for a card holder to make purchases in any particular
transaction category in order to take advantage of a higher reward
level. They are also not required to spend a certain amount on
particular products for a higher level reward is applied. With the
present invention, a card holder may be "rewarded" for purchasing a
home theater in one month, for taking a family vacation the next
month, and for purchasing a new computer the following month. Card
holders are rewarded for expenditures in relation to their
individual spending habits and patterns.
While the invention has been particularly shown and described with
reference to preferred embodiments thereof, it will be understood
by those skilled in the art that the foregoing and other changes in
form and details may be made therein without departing from the
spirit and scope of the invention.
* * * * *